Need to bring this legal notice into force
It is no secret that the Maltese flag has grown steadily and become more popular within the maritime industry over the last few decades.
Increasing numbers of ship owners and charterers choose to flag their vessels here because of the seriousness with which the Malta flag administration operates, the various incentives facilitating the ownership and operation of vessels under our flag, and its excellent reputation.
Within this context, it is essential for us to respond and act swiftly rather than to wait passively for opportunities to fall into our lap. The internationalisation of shipping often gives rise to situations where shipping companies incorporated in one jurisdiction may need to be re-domiciled and have their status changed to that of a company set up in another.
Although re-domiciliation of companies in Malta is perfectly possible in terms of the Continuation of Companies Regulations, the continuation of a foreign company under this procedure does not result in the direct conversion of the foreign company into a shipping organisation regulated by the Malta Merchant Shipping Act.
Under the present system, the re-domiciled company would be regulated by the Companies Act and it is only after a further conversion that the re-domiciled company would become a shipping organisation regulated by the Merchant Shipping Act.
This is a cumbersome procedure. It is unattractive not only because of the added expense that may be involved in first continuing the company and then converting it. The time-consuming nature of this process can pose serious obstacles to maritime transactions that often require swift action for lucrative opportunities not to be lost.
Picture, for example, the familiar scenario where there is an urgent need to reflag to Malta a vessel owned by a Panamanian or Liberian company which seeks to remain the owner of that vessel. This burdensome procedure does not provide much of a feasible option to the mechanisms available at present, namely the appointment of a local resident agent or the incorporation of a local company. It also may result in foreign companies seeking to own Maltese vessels losing interest in our jurisdiction and our flag.
Luckily the mechanism which will streamline this process of continuation and facilitate the re-domiciliation of foreign companies into Malta directly has already been created in the form of a draft legal notice.
It is, however, unfortunate that, despite the benefits this mechanism provides, it has not yet been implemented into the Maltese legal system and brought into force. This draft legal notice which seeks to amend subsidiary legislation 234.42 by bringing into force the Merchant Shipping (Shipping Organisations – Private Companies) (Amendment) Regulations, was completed some years ago. Despite being approved in principle, it is still on hold.
The major amendment contained in this draft legal notice is the insertion of an entirely new Part VI A into the principal regulations, which will regulate not only the continuation of foreign companies in Malta as shipping organisations, but also the continuation of Maltese shipping organisations abroad.
By means of these provisions, a foreign body corporate similar in nature to a company as known under the Laws of Malta – and the objects of which are such that once registered the company would qualify as a shipping organisation – may request the Malta Registrar of Companies to be registered as being continued in Malta under these regulations.
This will allow international vessel owners to continue to own vessels when these are flagged in Malta without having to appoint a resident agent, and without having to create new corporate structures for this purpose.
Given the increase in the amount of “international owners” opting for the Malta flag, this mechanism provides the local industry with a golden opportunity to attract big business – not only in the form of tonnage to be registered under our flag but also in the form of corporate entities requiring, among other prospects, the provision of corporate services.
It is in this light that there is a pressing need to bring this legal notice into force without further undue delay.
Source: Times of Malta
